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What Buyers Can Do While Staying at Home

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While you're isolating at home, there are things you can do to help buy a home now or in the near future.Instead of spending time surfing the Internet looking at homes, do the groundwork necessary to be able to purchase the home that you find.There is a lot of documentation necessary to qualify for a mortgage and to be approved.This part of the homebuying process can be done in advance, long before you even start looking at homes much less finding the one that you want.Assemble all documents to make a pre-approvalPhoto IDTwo months current pay stubsLast two years' W2sComplete copies of checking and savings statements for last three monthsCopies of statements for IRAs, 401k, savings, CDs, money market funds, etc.Employment history for last two years with addresses and contactsProof of commissioned or bonus incomeResidency history for last two years with addresses and contactsAssets for down payment, closing costs, and reserves; must provide paper trailIf self-employed, last two…

Showing Procedures During Covid-19

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During these unsettling times, sellers and buyers are concerned about staying healthy and virus-free as we all are.To keep all parties safe, new procedures should be considered regarding the procedure for showing houses.Agents are reporting that they are selling homes where the buyers have not physically been in the home and base their decision on the virtual tour found online.Some states have suspended showings because they are not considered essential services and other states have not addressed the subject.In the spirit of stepping up to do what is necessary, the following suggestions should be considered:Buyers should view the pictures online first to see if the home meets their needs.Most listing agents upload enough pictures to get a good idea of what a home looks like.Buyers should ask their agent questions that the photos don't address.Then, their agent can go through the listing agent to ask the seller direct.It may be possible for the agent or owner to do a Facetime walk…

Why have a mortgage during retirement?

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You don't have to watch TV for long before Tom Selleck, Henry Winkler or Robert Wagner will tell you why seniors should consider a reverse mortgage.However, there are a seniors who are resisting the conventional wisdom of having their home paid for and opting for a mortgage with payments on their home.In some cases, seniors will downsize into a smaller home and have a large amount of equity to pay cash for the new home.In other situations, they may have their home paid for and decide to do a cash-out refinance which will require making payments.The logic behind either of these examples could be motivated by the fact that since mortgage rates are so low currently, the owners can reinvest the money at a higher yield and make money on their equity.This will give them more money for their retirement income.A common question that is asked by owners considering such a strategy is whether they'll be able to qualify for the new mortgage since they may no longer be employed.The Equal C…

Shopping for a Mortgage

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A lower rate will not only result in a lower payment, it will amortize the loan quicker.A $250,000 mortgage at 4.5% for 30 years will have a $1,266.71 principal and interest payment.At 4%, the same loan will have $1,193.54 payment saving $73.18 a month and the unpaid balance would be $1,776 lower at the end of five years.Mortgage lenders tend to price their mortgages based on the credit score of the borrower.The higher the credit score, the lower the mortgage rate.There is an inverse relationship that the lower the credit score, the higher risk and therefore, a higher rate is needed to balance the risk.In order to get a valid rate that will be available to you with your credit score, you need to be pre-approved. The process of making a loan application before you find a home, allows the lender to verify your credit, income, and ability to repay the loan.Lenders usually only charge the cost of the credit report for this type of service.Be aware that pre-approval is not the same thing a…

Get Ready to Garage Sale

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A well-planned garage or yard sale can give you extra space in your home, get rid of unused items and make some money but it needs some of the same considerations that any business needs to be successful.Start early to research and planPromotion is keyDisplay items attractivelyPrice items rightOrganize checkoutDetermine the date of your sale, remembering that there are exceptions, but Saturdays are generally the best day.Experienced garage-salers believe that a well-planned one-day event will do as well as a multi-day event.Serious purchasers will look for the "new" sale and most people don't come back multiple days.Recognize that the first day of the sale will have the most people.Everyone will be looking for a bargain but some of them actually want to purchase things for them to resell at their own sales.Advertise in local newspapers and free online classified sites like Craigslist.If several families are going together for the sale, mention that in the ad; it will be …

What kind of properties are these?

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It is the way the property is used that determines the type of property it is, not what it looks like.  Based on the intent of the owner, the property could be a principal residence, income property, investment property or dealer property.A principal residence is a home that a person lives in.  There can be only one declared principal residence.  It is afforded certain benefits like deducting the interest and property taxes on a taxpayers' itemized deductions, up to limits.  Up to $250,000 of gain for a single taxpayer and up to $500,000 for a married couple filing jointly can be excluded from income if the property is owned and used as a principal residence for two out of the previous five years.An income property is an improved property that is rented for more than 12 months.  The improvements can be depreciated based on a 27.5-year life for residential property or 39-years for commercial property.  This is a non-cash deduction that shelters income.  When the property is sold, t…

Why Put More Down

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The least amount in a down payment is an attractive option when people are thinking of buying a home.  A common reason is to have cash available for furnishing the new home and  possible unexpected expenses. Some people don't have any options because they only have enough for a minimum down payment and the closing costs.  For those fortunate buyers who do have extra money available, let's look at why you'd want to do such a thing.Most loans in excess of 80% loan to value require mortgage insurance to protect the lenders for the upper portion of the loan if the home were to go into foreclosure.  FHA requires an up-front premium of 1.75% of the amount borrowed plus a monthly amount of .85% on the balance.  FHA mortgage insurance premium must be paid for the life of the loan.Mortgage insurance on conventional loans varies depending on the borrowers' credit and the amount of down payment being made.  Unlike FHA, when the unpaid balance reaches 78% of the original amount bo…